- Joined
- Feb 4, 2013
The other thing about Reagan's cuts is they were a second phase of JFK's fixing of the tax code, just that JFK started with a 91% top marginal rate, and in both cases a lot of deductions went away because it was incredibly complex to figure out what you actually owed because the system was insane. There's a psychological effect with the way the system was in that it was far more worth it to find every deduction you have coming, no matter how convoluted. It's worth paying the best accountants a lot of money to get everything down to a sane tax load because its far more expensive to not do that and pay more than you actually owe. In both cases revenues increased after the marginal rate cuts - in Reagan's case very significantly. With lower marginal rates, psychogically, you don't feel that pressure and don't go looking for every tax haven you're legally allowed so zealously.
We ended up with deficits because Reagan had to allow the democrats to spend tons despite promising spending cuts. He didn't have enough political capital to get everything, and while he did post 1984 election, scandals kind of wasted it. It took all the capital from barely surviving the assassination attempt to just get what he did get.
But at least our 91% top marginal rate was lower than the bong's 95% rate that was made famous by the Beatles.
